Bitcoin trading is undoubtedly an interesting and if successful, particularly profitable endeavour. However, as the market is increasingly maturing, so are Bitcoin trading products.
BitMEX is amongst the well-established and trusted cryptocurrency exchanges and, unlike a lot of the others, it offers leveraged contracts which are bought and sold in Bitcoin. It’s important to know that BitMEX handles only Bitcoin. In other words, all of the profits and losses are in Bitcoin, regardless of whether you’re buying and selling altcoin contracts.
Overview of BitMEX
Perhaps the definitive characteristic of BitMEX trading is that the platform allows particularly high leverage. Traders can use a margin up to 100x on their XBTUSD (we will explain it later) perpetual contract, which provides serious benefits for experienced traders.
However, it’s incremental to know that margin trading also carries substantial risks and it should only be exercised by traders who are well-aware of the market condition.
As we said before, BitMEX is a Bitcoin derivatives trading platform. As such, it allows users to buy and sell Perpetual Contracts and Futures Contracts.
What is a Perpetual Contract
Without going into boring details, the perpetual contract of BitMEX is a derivative product which is rather similar to Bitcoin Futures Contracts. However, it comes with a few specifics.
- It doesn’t have an expiry or settlement date.
- It mimics a margin-based spot market and it trades close to the underlying reference Index Price.
BitMEX’s XBT product doesn’t actually show the spot price of Bitcoin (BTC). It is an index which aggregates and provides the price for Bitcoin from Coinbase, Kraken, and Bitstamp.
What is a Bitcoin Futures Contract?
A Bitcoin Futures Contract is another derivative product. It represents an agreement to either buy or sell the cryptocurrency at a specified time in the future. There are physically-settled and cash-settled Bitcoin Futures Contracts. The ones brought by BitMEX are settled with cash, meaning that users don’t receive the underlying asset at the expiry date.
Margin Trading on BitMEX
We have a separate guide which describes the process of margin trading on BitMEX and how to use their trading platform.
What you need to know is that BitMEX offers up to 100x leverage on some of its products. This means that you will be able to “borrow” money from the platform in order to maximize your gains.
For example, imagine that you have 1 BTC and you want to start trading with it. BitMEX will allow you to trade with as much as 100 BTC, by loaning out 99 BTC to you. This can seriously improve your profits, but, obviously, it can also be devastating for your capital if things don’t go your way.
Don’t worry, though, you can’t owe BitMEX. They’ve made sure that they’re particularly secured and have set the so-called liquidation price. This is a price point which, upon reached, your position will be automatically closed. This is the point where your account balance can no longer support your position. So, for example, if you’ve bought 1 BTC at 100x leverage, if the price drops below a certain point which isn’t covered by your 1 BTC, your position will be closed as you’d have lost your balance.
Again, margin trading on BitMEX is particularly risky. It is highly advisable that you do so only if you have complete confidence in your decisions.
How to Open an Account on BitMEX
Now that we’ve gone through some of the basics, let’s see how to actually open an account on BitMEX.
The guys at BitMEX do respect transparency and, as such, all of the recent trading announcements are displayed directly as you land on their site.
From here, you’d have to choose the option to register an account, and you will see the following fill out form:
The registration process is particularly simplified. Once you fill out all of the above, you will also get a confirmation email to verify it. Do that, and you’re almost done.
As you log into your account, the first thing you’d want to do is to add another layer of protection. You should definitely enable the 2-Factor Authentication.
On top, you’ll see the following navigation menu:
Select the Account tab and navigate to “My Account” section on the left. There, you will find detailed instructions on how to enable the 2FA.
That’s pretty much it. You are ready to start trading on BitMEX. We’ll have a separate detailed guide on margin trading on BitMEX, so stay tuned for that!
We hope this guide has made it clear that BitMEX is amongst the reliable and reputed cryptocurrency trading platforms. It offers a high leverage, which is good for those who want to capitalize on market movement. However, it also carries serious risks, so make sure to be extra careful.
Disclaimer: This article is in no way an investment advice and it should not be construed as such. It is solely for educational purposes. My Bitcoin News is not responsible for any kind of investment decisions made by readers of its website. You should always consult a trained financial specialist before making any decisions to invest and be prepared to lose your entire investment.
Disclaimer #2: My Bitcoin News is affiliated with BitMEX and all links are referrals. As an appreciation for your understanding, everyone who signs up for an account using My Bitcoin News affiliate links receives 10% discounted fees for the first 6 months after registration. We appreciate your understanding as affiliate revenue helps us provide valuable and insightful content on a regular basis.